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HIGHLIGHTS
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Saved Park Lane Plaza on Moorpark Ave. in San Jose from being sold |
Park Lane Plaza is a small neighborhood shopping center located in West San Jose, near Lawrence Expressway and I-280. Built in 1973, the center is approximately 50,000 square feet of retail space.
CHALLENGE
Borelli Investment Company met the shopping center's owners, Park Lane Plaza Associates, in 1998 when Borelli acquired the portfolio of another management company.
Over the years, Park Lane Plaza had done relatively well in sales, attracting many local consumers. But the previous property management firm had not spent adequate time collecting expenses and working to raise the asset value of the property, and the owners were seriously considering selling the center.
SOLUTION
Soon after acquiring the Park Lane Plaza management contract, the Borelli Investment Company team was at work following Borelli's innovative property management model. Team members reviewed the center's financials and initiated a detailed study of its operating expenses. The study revealed that over the previous three years, substantial operating expenses had not been collected. The owners gave Borelli Investment Company permission to negotiate with each retail tenant to collect a portion of these past expenses, and establish a process that would ensure all operating expense impounds were collected in the future.
The Borelli team accomplished this in such a highly professional way that rather than alienating tenants, Borelli created significant good will for the owners — establishing a solid relationship with tenants. Borelli Investment Company's sophisticated systems helped its staff reconcile operating expenses and provide accurate and timely supporting detail, so each tenant was confident he or she was paying a fair share of the expenses needed to run the center. In the end, not a single tenant was lost in the process.
RESULTS
In just a couple of years, Borelli Investment Company was able to renew the majority of retail tenants at increased rates in line with the market. A number of retail businesses have been sold over the years, and Borelli has been instrumental in processing the assignment of the leases.
Park Lane Plaza has remained fully leased from the day Borelli acquired its management contract, and the additional revenue from the higher rents goes directly to the owners' bottom line — without "lost" operating expense impounds to offset it. The center was recently refinanced at more favorable terms, and now the owners anticipate keeping the center for years. Borelli Investment Company likes to think that it has been a small part of this neighborhood shopping center's ongoing success story.
